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Local Sick Leave Laws Raise Compliance Challenges

State and local sick leave laws provide different benefits for covered employees.​

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City ordinances that require employers to provide paid sick leave are popping up all over the country, and they're driving human resources departments to do calculations their systems can't handle, according to Lauraine Bifulco, president of Vantaggio HR, a multistate human resources consulting firm.

Bifulco spoke during a concurrent session June 22 at the Society for Human Resource Management 2016 Annual Conference & Exposition.

"Many of our clients have gone to implement the new rules only to find that the payroll system can't handle it," Bifulco said. This "sends us back into spreadsheet land."

When you have employees who work 20 miles away from each other and have different sick leave laws that apply to them, it's incredibly difficult from a compliance perspective, she said.

Trends in City Ordinances

Some states, such as California and Connecticut, have enacted statewide paid sick leave laws, and many cities throughout the country have passed their own ordinances.

There is a trend in these laws of setting sick leave accrual rates at one hour for every 30 to 40 hours worked. They do vary from place to place, however, and some jurisdictions permit upfront awards at the beginning of the year as an alternative to an accrual.

Employers should pay attention to the threshold number of employees that trigger compliance, Bifulco said. Some legislation says to look at the company's head count in the city or state, some says to look companywide, and some doesn't say at all.

"If it doesn't say, I would err on the side of caution and assume it applies to total company head count," she said.

Most laws apply to where an employee works, not where he or she lives, Bifulco noted. That's the general rule of thumb, but the individual laws could specify otherwise.

New Federal Executive Order

Starting on Jan. 1, 2017, certain employees working on new federal contracts will be entitled to paid sick leave under Executive Order 13706. The leave will accrue at a rate of one hour for every 30 hours worked and cannot be capped at less than 56 hours.

Unused sick leave will not be payable upon termination of employment under the order, but the amount an employee has accrued will be restored if the worker is rehired within one year.

If a federal sick leave law that covers the private sector is passed, it will probably look a lot like this, Bifulco said.

Sick leave ultimately may take on a similar structure as family and medical leave, she said, where the federal law provides for a minimum offering and states may choose to provide additional benefits.

Strategy for Compliance

Many of the existing laws are poorly worded and difficult to interpret, according to Bifulco. Even ordinances that look similar may have nuances that employers need to take into account.

Most—but not all—sick leave laws apply to full-time, part-time, temporary and seasonal employees. Some exclude certain employees and industries, and many have different rules based on head count.

If a company has employees in multiple jurisdictions and wants to have one sick leave policy, Bifulco recommends making a chart that breaks down the variations in each law.

The chart should include applicable categories such as annual and total accrual caps, threshold head count, reasons the leave may be used, tracking and reporting requirements, and whether or not time can be carried over to the next year.

Bifulco encouraged employers to select the most generous offering in each category for the company policy, but she cautioned that this is easier to identify for some categories than others.

As an example, Bifulco said laws use different "lookback periods" to calculate the sick leave pay rate for workers with variable pay. A 90-day lookback period may sometimes provide a higher rate and sometimes provide a lower rate than another calculation method.

Additionally, some laws make recommendations beyond what's required. "But when the law says it encourages something, I'm usually going to do it," Bifulco said.